Revised onApril 27, 2017

Midterm Management Plan
2015.4-2018.3『Change For Innovation ２０１8』
Original plan published on April 30, 2015

Copyright 2017 NSD CO., LTD.

For Reform to Business Structure
Since NSD was established in 1969, we have been proud to keep our corporate
mission, which is to provide our customers with high quality services andcontribute to the improvement of their enterprise value. Our customers havespread over various industries including financial institutions, services,manufacturing and telecommunications, and the company are going to mark 50thanniversary in 2019.
The speed of change is accelerated at IT industry and some report predicts thatalmost all of the people in the world will be connected by online network. The
shift from “owning a system” to “utilizing it” becomes the predominant trend, andthe progress of IT technology creates a new IT products and tools. The customer
needs are also increasingly sophisticated and diversified. Some of them are toutilize IT technologies to the business judgement.
We take these environments as a great business opportunity and have made the3 years mid term management plan “Change for Innovation 2018” starting atApril 2015. In this management plan, we are going to advance the reform ofbusiness structure. We think it is important to enhance distinct and uniqueservices and solutions such as health care IT and foster the Non-Contract Based
Software Development business toa new pillar of income as well as tostrengthen furthermore the Contract Based Software Development business
which is our core business. We will also continue to focus on the enlargement ofglobal business and M&A.
April 30, 2015
NSD CO., LTD.
President & CEO
Yoshikazu Imajo
Copyright 2015

Results of Previous Midterm Management Plan(Figures)【Original Plan】【Results】(¥ Million)

Results

First
Term

Second
Term

Third
Term

First
Term

Second
Term

Third
Term

FY2012FY2013

FY2014FY2015FY2013

FY2014FY2015Net Sales

34,41237,00040,00044,00036,63240,28542,990Operating
Income

3,386

4,000

4,500

5,300

4,483

4,848

5,144

Operating
IncomeRatio(%)

9.8%

10.8%

11.3%

12.0%

12.2%

12.0%

12.0%

Ordinary Income

3,668

4,100

4,600

5,500

4,530

5,076

5,326

Net Income

1,867

2,100

2,700

3,200

2,454

3,165

2,973

ROE(%)

4.7%

--

8.0%

6.0%

7.5%6.9%

Consolidated

1.During the period covered by the previous midterm management
plan (FY2013 to FY2015), sales growth increased by about 25%.

2.Operating income ratio, ROE increased substantially.
Copyright 2015

Results of Previous Midterm Management Plan(Policies)

1.Strengthen further competitiveness in Contract Based Software Development
・Further develop existing and new customers through combining our all-round know-how,
new specialized sales division, and proposal-based sales.
・During the period covered by the previous midterm management plan (FY2013 to FY2015),
Net sales of Contract Based Software Development increased by 22.7%(¥27.8 →¥34.1billion) in the last 3 years. Sales growth increased 7% and over per year.

2.

Aim at becoming a leader in a niche marketof Services-Provision-Oriented Solution Application

・New services are launched. Telehealth is the connecting patients to clinicians byusing telecommunication technologies. FIND is used for the smart device application
developed with local government which contributes to the regional revitalization.
・Sales strength was improved by new subsidiaries as below.
April 2013 Founded Business Innovation Co., Ltd.
March 2015 Acquired NMsystems CO., LTD.

3. Promote global business expansion ・ Actively seek M&A opportunities
・USAMay 2012
April 2013

・China Oct. 2012
Feb. 2014

Copyright 2015

Founded "NSD INTERNATIONAL INC." in New York.
Viterion Corporation, a subsidiary of NSD International, Inc.
acquired telehealth business from US subsidiary of Bayer Corp.
Founded “Renbenxindong Technology Ltd.” in Beijing.
Renbenxindong Technology Ltd. provides health care business.
Founded "Chengdu Renbenxindong Technology Ltd." as asubsidiary of Renbenxindong Technology Ltd. Chengdu
Renbenxindong Technology Ltd. Provides offshore development services.

Business EnvironmentThe Reform to Business
Structure is necessary

1

The shift from Contract
Based Software
Development toSaaS (Software as aService) solutions inaccelerated.

3Customer needs
are increasinglysophisticated anddiversified.

Seriousshortage ofsystems
engineer
Copyright 201524

The globalization
expands andcompetition fromoversea IT
suppliers

Course of Action in Long Term
Contribute to enhancing the Enterprise Value of Customers
Through our High Quality Services

1

2

Become familiar with every aspectof financial operation and obtain
unwavering confidence fromJapanese financial institute inparticularDevelop
Multiple Strong
Pillars of Income

In the field other than the financial
industry, secure the position as oneof the leading players in each field(Industry or Service)

3Make distinguishedpresence in the NonContract Based Software
Development field
Copyright 2015

Target Indices (Consolidated)

Revised on
April 27, 2017

Fiscal Year Ending March 31, 2018¥570 Million Revised*1
20% and Over Revised*1
12% and Over
8% and Over

１. Net Sales
Based
２. Non-Contract
Software Development
３. Operating Income Ratio
４. ROE(¥ million)
FY2015FY2016

ActualActual

FY2017
Actual

FY2018

Revised *1

Net Sales

42,99051,58555,23457,000OperatingIncome

5,144

6,378

7,173

7,450

Ordinary
Income

5,326

6,456

7,300

7,550

Net Income

2,973

3,110

4,543

5,000

【Ref.】 Original Plan published on April 30, 2015(¥ Million)

FY2016FY2018FY2017

Net Sales

46,50048,00050,000Operating
Income

5,600

5,800

6,100

Ordinary
Income

5,700

5,900

6,200

Net Income

3,500

3,800

4,100

Copyright 2015

*1 Revised on April 27, 2017

Key Policy：Basic Strategies

1. Create the NSD brand by enhancementof Contract Based Software Development

BasicStrategies

2. Enhance Non-Contract Based SoftwareDevelopment which based on SaaSSolutions

3. Expand global business by the fullmarketing and strategic investment

4. Actively seek M&A opportunities※ Excluded target indices

Copyright 2015

Key Policy：Specific Strategies
1. Contract

Based Software
Development

Expand market share by theknow-how to meetcustomers demand and newdivision "Business Sales
Division"

SpecificStrategies

7.HumanResource
Development
Development ofProject Managers
and global humanresources.

New Solutions,enhancemerchandising, andCloud Services

3.Developmentof New Businesses

BasicStrategies
6.M&A
Established Strategic
Business Development
Department as aspecialty

Copyright 2015

2.Solutions

Construct new businessmodel based on healthcare IT and theother services

5.BlobalBusinesses
Acquire New customers
in US. Build new sales
network in China.
Consider south east
Asian market

4.BusinessPartners

Acquire Long term
Business Partners

Analysis of Factors to Achieve the Plan
Revised on
April 27, 2017

Net Sales(¥100 Millions)(Consolidated)

570 *2

Factor ③ 3
Factor ② 29
Factor ① 108

430
89341

Non-Contract
SoftwareDevelopment121*2

Non-Contract
SoftwareDevelopment*1

Contract
Based
SoftwareDevelopment*1

2015/3

Enhance Contract
Based Software
Development
・the know-how tomeet customers
demand・ Expand market
share by newdivision "Business
Sales Division"

Enhance solutions
・New Solutions
・Enhance
merchandising
・Cloud Technology

Enhance Healthcare IT
・Health managementbusiness in China
・Health care businessin Japan

Enhance
Educational ITContract
Based
SoftwareDevelopment449*2・Provide thee-portfolio system

2018/3*1 Contract Based Software Development is Net sales of System Development division. Non-Contract Based Software Development
is net sales excluded System Development division.
*2 On April 27,2017, we modified the consolidated net sales in the fiscal year of 2018 from ¥54bill to ¥57bill, Contract Based
Software Development sales from ¥40.1 bill to ¥44.9bill(Factor①：From ¥6bill to ¥10.8bill), and Non-Contract Based Software
Development sales from ¥13.9 bill to ¥12.1bill (Factor②:From ¥3bill to ¥2.9bill, Factor③:From ¥2bill to ¥0.3bill)

Copyright 2015

Revised onApril 27, 2017

Shareholder Return

1.Maitain a stable consolidated dividend payout ratio, more than 40%.

2.Trying to preferential returns to shareholders, taking the performance andthe trend of the stock price into account comprehensively.

Changes in Shareholder Returns（¥）
100Dividend Per Share（％）

Payout Ratio

1005,000804,000

80

Total Payout of Dividends
Share Buy-back（Millions of ¥）TBD
60

52.1%

60

3,000

40.7%

1,877

41.6%
40

20

¥37

¥44

¥48

040

2,000

20

1,00002016/32017/3

2018/3
(E)

1,609

1,008

1,000

1,888

2,030

2017/3

2018/3(E)0

2016/3*1 On April 27,2017, we announced the dividends per share(Anticipated) in the fiscal year ending March 31, 2018.
*2 The forecast figures above are based on the information currently available, which may be changed and affected by various future factors.

Copyright 2015